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00:00We've got right now Deveen Choksi, Managing Director at DR Choksi Investment and Avinash
00:04Kaur Rakshakar, Director Research at ProfitMarkt Securities, to just give us a sense and a guide
00:12for our viewers on how to pick the right IPO among all the options you have. So we'll show
00:18you those graphics on our screens. Cross, Toll & Stire, Bajaj Housing Finance, all of them out
00:25this week. Deveen, let me start with you on which ones you would pick. Do you have a favourite
00:31ranking? Which ones do you think are worth applying to? Good morning. Well, Bajaj Housing
00:39Finance clearly is a lottery. I think it's a stock which one should be owning in the portfolio.
00:45Important point, a pure focus housing finance company with a variety of customer segments
00:51covered. I think, be it loan against property, be it developers finance, be it mortgage finance,
00:58or be it rental discounting and both. I think for the prime sector housing as well as for the
01:04affordable sector housing, the business of the company is spread across. So two, three things
01:10come out very clearly. On one side, India has a long headroom, long runway as far as the penetration
01:17of the housing is concerned. Today, we are just sub 10% of penetration, I think, which could
01:22possibly grow as high as 60%, I think, in the mortgage lending business. So from the population,
01:28I mean to say. So from that perspective too, I think the runway is quite long and anybody, I think,
01:35with a sizeable, a better approach, I think, will definitely have the business to talk about.
01:41Bajaj Housing Finance, I think they have particularly set their meter right.
01:45They're growing at the rate of compounded rate of around 30%. Now, when you grow 30%
01:50compounded rate every three years, you're growing the size to double. And that's probably, I think,
01:56the business of the company remains more sure. We have seen the companies in past, wherever they
02:01have, I think, disciplined way of producing the growth, they have actually produced enormous
02:06wealth for the investors. So from that perspective too, I think this model looks, I think, appealing
02:10to me. So on one side, business dynamics, definitely working good for them. Bajaj Pedigree,
02:17giving them a good way to access the fund at a cheaper cost. On the other side, I think lending
02:23money... But the problem is you started this sentence by saying it's a lottery. So it's all
02:29amazing. But you know, you're saying it's a lottery to actually get allotment. So then,
02:36in which IPO this week, do you have a better chance? Let me frame it that way, because you
02:40have PN Gadgil, you have Cross, you have Tollens. Should people look at some of the other options?
02:46So Bajaj Housing Finance, I'll say lottery, because I think here you are not going to get
02:51enough amount of allotment possibilities because of the rush. So even if you end up getting one,
02:56I think it's a lottery going to be for you. So certainly, I think preference would be with Bajaj
03:01Finance. The other two companies, the Cross and Tollens Tyres, both these companies are basically
03:06catering to the commercial vehicle segment as well as the off-road segment and the tractor
03:12segment in particular. Cross is basically more on the engineering side of the business, whereas
03:17Tollens Tyres is largely on the tyre side of the business, but catering to the same sector. So
03:22certainly, I think there is a growth involved in it, but compared to the size is smaller.
03:26They're relatively, I think, a smaller company. So obviously, some traders delight, momentum
03:32traders delight as far as I think those kind of things are concerned. They are attractively
03:35marketed to at around 34% or 34 times price earning ratio, both these companies. So from
03:42that perspective, they are not expensive to be priced and the cagger growth in the last three
03:46years has been smart for both these companies. So obviously, I think the momentum traders would
03:51probably find some merit in those two companies. Bajaj Finance, definitely, I think long-term
03:55investors delight as far as the portfolio of choice is concerned.
04:25Good morning, Samina. See, my guess is that this is an issue which is coming from the Bajaj
04:40Group after a very long time. And I think the Bajaj Group has rewarded investors quite handsomely.
04:46Valuations apart, I think this company has got a great future. The runway for housing finance
04:51in India is extremely large. And I think Bajaj housing is the second largest housing finance
04:57company. And with the kind of funding they get it, I'm quite sure that in the next two to three years,
05:02they should be doing a very large kind of AUM book and with a very impeccable asset quality.
05:09So I think your question whether one should buy the stock on listing, because obviously,
05:13this share, this issue would get heavily oversubscribed. Yes, I think if you've got
05:16the next two to three years in mind, this is a stock which has got to be kept in your portfolio.
05:20Please don't miss it. But you need to give in that much time because obviously,
05:25when you buy a stock at 50-60% premium, obviously, you're buying at an elevated level. But I think
05:31growth prospects seem to be quite solid. And I would not be surprised that over the next, say,
05:3612 to 18 months, based on the kind of news the company announces, the performances the company
05:40delivers, the investors could still make a good amount of money. But I think over the next two to
05:46three years, it's a portfolio stock, one should definitely stay invested.
05:50Okay, let's talk about the others as well. And we've briefly spoken about it. But cross and I
05:56want a view from both. But Avinash, I'll start with you first. The CAGR performance, in fact,
06:04I was looking at a note from Devyan Choksi Research, 44% CAGR for the last two years,
06:12remarkable ROCs for an auto bank. Is it expensive though? Or is it something that you would subscribe
06:19to? Avinash, the question is to you. I think, you know, if you look at the longer term picture,
06:28they are into basically suspension trailers, machined components. And I think this is a very,
06:34you know, high end engineering kind of business. So I think despite the fact that the stock may
06:38appear a little expensive, if one were to take the next two years, and see the kind of growth
06:43opportunity, then I think clearly, you know, they've done a top line of 620 crores, a bottom
06:48line of around 45 crores. And as you said, the CAGR is almost 40-45%. So I think, you know,
06:53if they continue to maintain this growth rate, then I think the markets will definitely be
06:58rewarded. And I would not be surprised that this issue would get a solid response considering the
07:03fact that this is a very high entry business, it takes a lot of time to become a well established
07:08vendor. So you know, machining is a very high end activity. So yes, from a longer term perspective,
07:13yes, even from a listing gain point of view, there could be a reasonable listing gain also for this
07:17stock. And Deven, good morning. Lovely note by the way on cross, I'm just trying to understand.
07:23So listing gain notwithstanding, and let's assume that the listing gain happens as Avinash is saying,
07:28what about post that? Is this a company that you would keep in your portfolio? Or are the other
07:33listed auto banks giving you a better opportunity? Cross that is. Yeah, good morning.
07:39Well, I think definitely other auto banks have their portfolios, but the fact remains that I
07:44think this company is getting more amount of prominence, two or three reasons. Government
07:49is increasingly spending higher amount of money on the agriculture and agricultural related
07:54activities. So obviously, in the sector in which they are present is largely the tractor, the farm
08:00different side of the activity, wherein I think the majority of the machine components are going
08:04into. So that is one area where we are reasonably sure about the kind of demand scenario getting
08:11generated. In fact, in last few years time, if you see this particular growth, it gets validated
08:17because of the larger emphasis of the government. I think this kind of companies which are up till
08:21now sleeping, you know, I think they have started suddenly waking up because of the kind of business
08:25they started attracting into. And I think given the kind of pedigree for a longer period of time
08:30that they are enjoying, I believe that I think the market is ready for the products in which
08:35they are supplying to different OEMs as well. So from that perspective, we remain reasonably
08:40confident about the growth, at least if not more for the next three years. And that's where probably
08:45I would like to think that such kind of companies which are relatively missing in the marketplace,
08:50you know, I think they would probably find the presence. The off-road vehicle markets, the
08:56tractor, the farm equipment markets, they are the ones I think which are niche markets and they're
09:00comparatively the margins remain relatively better as compared to I think the other peers.
09:05So to an extent, I think they should be performing better going forward. And as you have seen the
09:10improvements in efficiency, we believe that the margins are likely to remain a little bit on a
09:14higher side. Given the lower raw material cost advantage that they are now getting is also
09:20going to be another factor which should be giving sufficient clarity for next years
09:24on the margin front for this company. Just Avinash, your view on Tollens as well.
09:30Tollens is the other one that opens today. Are you excited about it?
09:35Well, Tamanna, in fact, this is a company which is largely a tyre trading company. 75% comes from
09:41tyre trading business. And basically the USP for the company is that, you know, it's situated in
09:46Kerala. They've got three facilities. So I think the raw material problem is not there. And I think
09:51I was just seeing the numbers on a top line of 227 crores. They've generated a pad of 26 crores,
09:57which is quite attractive. So I think, you know, if the company is able to maintain these kinds of
10:01margins and continue its business model, because tyre trading is incessantly a very solid business,
10:07a very few players in the market apart from LG, which is a market leader here. So, you know,
10:12in terms of valuation, the stock appears to be fully priced. But yes, if the company can generate
10:17a decent ROE and a kind of, you know, see a good performance going forward, then I think this issue
10:22would definitely get a decent kind of response. Most importantly, crude prices have started
10:26correcting. So I think that also should add to the margin. So we have given a subscribe to this
10:31issue for our investors, but yes, from a slightly longer term horizon. Okay, Deven, about 50 seconds
10:38left for Gala Precision to list. Any thoughts on this one, the new listing today? Honestly,
10:44Neeraj, I haven't looked into very detail about this company. So probably I'll take another chance
10:49to talk to you later. Yeah, sure. Avinash, quick, same question to you. 40 seconds left. Anything
10:55on Gala? I think, you know, looking at the response the IPO got, I think one should easily expect a
11:0150 to 60% kind of premium on listing. The company has done remarkably well. And I think
11:08the issue has been subscribed significantly well. So I think at least expect a 50 to 60% pop up on
11:13listing. And thereafter, I think we'll have to see which are the marquee investors who actually
11:17buy on the first day. But yes, fundamentally, the company appears to be on a strong wicket.
11:21Okay. Gemma and both of you, thank you so much for agreeing on a short notice to talk to us on
11:27the most active things here in markets currently, which is IPOs.